By Anjan Roy
The passage of the Lindsey Graham Act in the US House of Representatives empowering the President to impose fresh tariffs of 100% on countries importing Russian crude is real bad news for India. Following empowerment, if the US president imposes fresh tariffs of that order, it can present a very difficult choice for Indian policy makers.
US is throwing a tough challenge before India — stand up to America and maintain your strategic independence; alternatively, accept US demands and face serious problems of managing your fuel economy, including domestic political issues.
Given the Hobson’s choice before the country, India but has no option but to stand up to US bullying.
On the one hand, a tariff of this order could mean India would be out of US markets in most of the items exported from India. No exporter enjoys a margin even close to the tariff values to remain competitive. Even though India is not a export dependent country like many others, Indian exports worth around $140 billion is not something which can be scoffed at.
On the other, being browbeaten by the US in selection of its import destinations is a critical defeat for any country. India has steadfastly maintained its freedom of choice in selecting where it decides to import is requirements from.
So far, despite the strongest adverse storms during the Ukraine war crisis as well as the Iran war, India has escaped the worst shortages in fuels that many others had faced. Neither oil had run low, nor even the critical supplies of cooking gas has evaporated. Both were by and large maintained.
Any disruptions in fuel supplies, particularly, that of cooking gas could become a major factor in domestic politics. Earlier, the government itself had promoted the use of cooking gas for middle, lower middle and the weakest sections of society and had organised subsidised supplies of cooking gas.
Now, if the supply lines for cooking gas gets suddenly crimped, it will reflect badly on the BJP government at the centre. This will become a political issue. So for the country, there is little option to quickly move away from the present dispensation for fuel imports from Russia and look for alternatives.
Besides, there are any number of rigidities. Indian refiners cannot all on a sudden move away from the present mix of crude oils and switch over to alternative crudes. The refineries would have to be reset to use some other crude than the present mix.
But now, if the US goes ahead with its threatened tariff, even if not 100%, India will have to forego a substantial chunk of exports and the consequent spiralling impact in the affected industries. Alternative would be to look for oil and gas supplies from alternative sources than Russia which had gained prominence in overall fuel supplies.
The other country in US cross-hair is China. However, China has taken very firm and confrontationist attitude towards the US move to punish Russian fuel importers. China has stated that the US move was contrary to international law and it could not impose such discriminatory tariffs on select countries.
This Chinese firm stand comes despite a much more hefty exports basket from China to USA. Any impact on Chinese exports to USA, as a result of the imposition of the punitive tariff could be much larger. It will leave a mark of a far wider industrial devastation in China.
Nonetheless, China could afford to adopt such a combative position vis-a-vis USA because of its economic heft and its critical chokehold on stretches of American industry. China had already demonstrated its power even earlier when Donald Trump had threatened the country with tariffs and the all-powerful US president had to beat a hasty retreat with tails between his legs.
On an earlier instance, China had threatened to altogether suspend its supplies of “rare earth” minerals to United States. China is virtually the sole supplier of these minerals with only residual quantities supplies by a few others.
These minerals are critical for production of any number of the most critical items including various defence articles. US automobile industry, which is one of the largest employers, similarly depends on Chinese supplies of these rare earth minerals. Trump had quickly retraced his steps and rolled back. There came the epithet: TACO —Trump Always Chickens Out.
In the situation, if the US president chooses not to punish China and impose the huge tariff on India and a few others, there will be little option but not to resist and fight. It will be a sheer prestige fight and demonstration of strategic independence for India. India should now pick up the TACO cue. (IPA Service)
